What’s good for the world isn’t necessarily great for the video games industry. As the pandemic wanes, people are redirecting their spending to pre-pandemic items, which is likely to cause the video games market to contract in 2022.

That’s according to a new report from Ampere Analysis, which said it expects the games market to contract 1.2 percent in 2022 to $188 billion. That’s quite the turn-around for an industry that’s grown 26 percent and added $39 billion in new spending between 2019 and 2021. However, "the sector landscape has become increasingly unsettled during the first six months of 2022," writes Ampere, stating it is "inevitable that consumer attention on gaming will in some cases become more diluted" as the pandemic ends.

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Ampere also noted the negative impacts of inflation, the rising cost of living, and the increasing possibility of another global recession as dragging the video games market down. "The idea that the games market is ‘recession proof’ is a fallacy," the company wrote, although it did conclude that spending will "spring back in 2023."

Games Industry

Specific segments of the video games market can be attributed with the contraction. Mobile gaming is expected to decline 1.3 percent, while PC gaming is set to decline 3 percent, largely due internet cafes shutting down "in key Asian markets." Lifted pandemic restrictions have caused many of those cafes to bounce back, but not quite as many as there were pre-pandemic.

Console sales are largely expected to remain flat, and cloud gaming will continue to grow in 2022. Supply chain issues are also expected to way down the hardware segment for the remainder of the year.

"After two years of huge expansion, the games market is poised to hand back a bit of that growth in 2022 as multiple factors combine to undermine performance," wrote research director Piers Harding Rolls. "Even so, the year will end well ahead of pre-pandemic performance, and the outlook for the sector as a whole remains positive, with growth forecast to return in 2023."

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